STIC exits Jeil Hydraulics for 3.1x return

STIC paid KRW10 billion for a 22% stake in the company in late 2009 via STIC Private Equity Fund II. The initial plan was for Jeil to list on the Korean exchange, generating capital for further expansion and allowing STIC to exit its holding. However, Eaton came in with a substantial offer and when the founder and CEO decided to cash out, STIC tagged along.

Headquartered in Busan, Jeil produces track drive motors, swing drive motors, main control valves and remote control values for the construction equipment market. Its principal clients include the likes of Hyundai Havy Industries and Doosan Infracore.

STIC felt there was the capacity to supply Chinese excavator manufacturers in addition to core Korean clients. It helped the company set up after-service centers in China in order to boost exports. Total sales came to approximately $189 million in 2011.

Gaining greater exposure to China also allowed Jeil to diversify its business, which remains highly dependent on demand from major Korean companies. It is one of a number of high-quality domestic manufacturers that STIC believes has the scope to offer global firms an alternative to Japanese suppliers.

Eaton is an industrial manufacturer specializing energy-efficient solutions for managing electrical, hydraulic and mechanical power. Based in the US, it recorded sales of $16 billion in 2011, serving customers in more than 150 countries.

Earlier this year, STIC PE Fund I - also known as Oryx-STIC Korea Technology Fund - exited Korean golf simulator business Golfzon. A minority stake was sold for $72.9 million, securing a 3.6x return or gross IRR of 66.1% on an initial investment of $20.3 million.

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• Topics
• Exits
• North Asia
• Industrials
• STIC Investments
• South Korea
• Trade sale
• Exit
• manufacturing